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Victoria strongest performing retail market in 2016

Victoria continues to lead the Australian retail leasing market into 2017 with year-on-year growth, while the rest of the market generally remains stable.

According to CBRE’s latest Retail MarketView, Victoria saw a 2.5% y-o-y increase in CBD retail, a 6.2% y-o-y increase in large format retail, and was stable in shopping centres.

New South Wales also performed well in 2016, most notably in shopping centres and large format retail, with 3.2% and 2.5% y-o-y increases respectively. Western Australia recorded the weakest growth, down 8.6% y-o-y in CBD retail and 2.2% in large format retail.

Zelman Ainsworth, Senior Associate Director, said the retail leasing team in Victoria is expecting a significant amount of movement this year from major local fashion and services businesses who have been watching the market closely over the last two years.

“Victoria retail remains in a very strong position heading into 2017, with the successful opening of the recently refurbished Chadstone Shopping Centre – the largest shopping centre in Australia, low vacancy and high rental being maintained in the CBD, and the suburban retail markets bouncing back,” Mr Zelman said.

“Lack of supply, high rents in super prime locations and an influx of consumers with the suburban apartment boom will also contribute to the growth.”

“We are also noticing that more retailers are identifying online as an opportunity to create better awareness for their brands, whilst driving extra traffic into their retail shops. Online is no longer considered a threat but rather an enhancer to bricks and mortar shops.”

CBRE Senior Research Manager, Australia, Danny Lee, said that retail trade grew by 3.4% in Q416 which represented a slight improvement over the previous quarter.

“Potentially, we may have reached a stabilised growth level after many quarters of declining growth,” Mr Lee said.

Leif Olson, Head of Retail Brokerage, Australia, said international retailers continue to enter Australia, with 75 stores opening in 2016 compared to 73 in 2015.

“Of the 75, 70% were expansions by existing brands with international retailers who have launched flagship stores in most Australian CBDs over the past three years, now expanding into major regional centres,” Mr Olson said.

We are continuing to see a steady stream of international luxury brands that are not represented across Australia looking to this region for expansion, particularly across the eastern seaboard.

“We expect the expansion of international brand into the suburbs will continue in 2017,” Mr Olson concluded.

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